Critical Materials

Critical Materials: Present Danger to U.S. Manufacturing

Copyright Date: 2013
Published by: RAND Corporation
Pages: 66
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  • Book Info
    Critical Materials
    Book Description:

    A high percentage of many raw and semi-finished materials critical to U.S. manufacturing are imported. China is the controlling producer of 11 of these materials and has instituted export restrictions that have led to two-tier pricing, creating pressure to move manufacturing to China. This report suggests the need for actions to mitigate the impact of such market distortions on the global manufacturing sector.

    eISBN: 978-0-8330-7927-5
    Subjects: History, Political Science, Business

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-vi)
  4. Figures
    (pp. vii-viii)
  5. Tables
    (pp. ix-x)
  6. Summary
    (pp. xi-xvi)
  7. Acknowledgments
    (pp. xvii-xviii)
  8. Abbreviations
    (pp. xix-xx)
  9. CHAPTER ONE Introduction
    (pp. 1-4)

    The U.S. economy, especially its manufacturing sector, is dependent upon the supply of raw and semi-finished materials¹ used to make products. While the United States has extensive mineral resources and is a leading global materials producer, a high percentage of many materials critical to U.S. manufacturing are imported.² This report is concerned with the reliability of such imports and the potential for uncertainty and disruption in the supply chain through which U.S. manufacturers obtain critical raw and semi-finished materials, which are defined for the purposes of this report as materials that are essential inputs to manufacturing operations. Our key concern...

  10. CHAPTER TWO Concentration of Production of Critical Raw Materials
    (pp. 5-10)

    The most commonly used measure of concentration in commodity markets is an index attributed to the economists O. C. Herfindahl and Albert O. Hirschman.¹ For our purposes, the Herfindahl-Hirschman Index (HHI) is defined as the sum of the squares of the fraction of market share controlled by the 50 largest entities producing a particular product. If 50 countries are active in producing a specific commodity and each has the same market share, the index would be 0.02, which is very close to its lower limit of zero. The maximum value of the index is unity, which corresponds to a single...

  11. CHAPTER THREE Chinaʹs Role as a Controlling Producer
    (pp. 11-16)

    China’s unique role as the dominant producer of so many important raw materials has emerged as a consequence of three factors:

    China’s large resource base, due to its size and geographic location.

    The Chinese government’s long-term emphasis on mineral production, including substantial investment in mining and processing.

    China’s ability to produce raw materials at lower cost than many other producers because of its relatively lax environmental and occupational health and safety standards and regulations.

    Because of their inability to compete with China’s low-price exports of raw materials, many mines and processing plants outside of China have closed in recent years.¹...

  12. CHAPTER FOUR Tungsten: Case Example of a Critical Raw Material
    (pp. 17-30)

    This chapter reviews the supply situation of tungsten, a critical raw material for which U.S. manufacturers are dependent upon imports. China is the controlling producer of tungsten, with more than 80 percent of its 2010 world mine production.¹ The situation of tungsten is typical of the critical materials and families of materials discussed in the previous chapter and, as such, provides a window for considering potential supply disruptions and possible strategies for mitigating these disruptions.

    Because of its unique combination of high-density, high-temperature mechanical properties, high electrical conductivity, and low vapor pressure,² tungsten provides superior performance in many applications such...

  13. CHAPTER FIVE Conclusions and Response Options
    (pp. 31-34)

    The data and analyses presented in this report suggest that issues with the supply of minerals are less about the minerals themselves and more about where the raw and semi-finished materials that underpin the world’s economies are produced and processed. One clear conclusion is that producers who command a large market share of a mineral’s supply can distort mineral commodity markets through production controls and export restrictions. Thus, it is the concentration of supply and, in particular, its concentration among producing countries that either have weak governance or that control production at the governmental level, or both, that can increase...

  14. APPENDIX A Top Three Producers of the 41 EC Critical Raw Materials
    (pp. 35-40)
  15. APPENDIX B The Worldʹs Largest Tungsten Deposits
    (pp. 41-42)
  16. Bibliography
    (pp. 43-46)